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The Zacks Analyst Blog Highlights: Ameren, CenterPoint, South Jersey Industries, Boston Beer and Ollie's

Zacks Equity Research
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For Immediate Release

Chicago, IL – June 19, 2018 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Ameren Corporation AEE, CenterPoint Energy, Inc. CNP, South Jersey Industries, Inc. SJI, The Boston Beer Company, Inc. SAM and Ollie's Bargain Outlet Holdings, Inc. OLLI.

Here are highlights from Monday’s Analyst Blog:

Trade War Fears Grip Wall Street: 5 Ultra-Safe Stocks

Following months of negotiations, the United States and China are again on the brink of an all-out trade war. The United States has targeted a flurry of Chinese goods, while China has vowed to respond with tariffs of its own, which could hurt U.S. businesses.

Trade wars are never good for the economy and squeeze corporate profit margins. Thus, this escalating trade tension is weighing on investors’ risk appetite. This, in turn, calls for investing in low beta defensive companies. Such stocks provide risk-adjusted returns and steady earnings regardless of the state of the equity market.

Trump Announces Tariffs on Chinese Goods

The White House will impose a 25% tariff on $50 billion Chinese imports, which has increased the chances of a confrontation with China over trade.. The United States has decided to penalize China for stealing American technology and of course trade secrets. Chinese aerospace, robotics, manufacturing and auto makers will mostly be targeted.

The tariffs will be passed in two phases. More than 800 Chinese exports, worth $34 billion, will be subject to tariffs beginning in July and another 280 or so will go through a public comment period and take effect later.

Trump gave the green light after meeting top economic officials last week, including Treasury Secretary Steven Mnuchin, Commerce Secretary Wilbur Ross and U.S. Trade Representative Robert Lighthizer.

Trump said that trade between two of the world’s largest economies “has been very unfair, for a very long time” and that the “situation is no longer sustainable.”

Trump has, in fact, kept the doors open for further escalation if China imposes retaliatory tariffs. He had earlier suggested that tariffs could apply to as much as $100 billion worth of Chinese goods.

China Vows to Retaliate, Blames U.S. of Firing the First Shot

China has accused the United States for ratcheting a trade war. The Chinese government said that it will respond accordingly to U.S. tariffs. China has vowed to impose tariffs on 545 U.S. goods worth $34 billion. These include agricultural products, automobiles and seafood. The tariffs are expected to get implemented from Jul 6. Beijing will impose tariffs on another 114 U.S. goods like chemicals, medical equipment and energy products later.

Beijing confirmed that it “will immediately launch tariff measures that will match the scale and intensity of those launched by the United States.” Beijing added that “all economic and trade agreements reached by previous negotiations will be nullified at the same time.” That includes a deal to increase purchases of American energy and agricultural products.

China’s Commerce Ministry, by the way, urged all the countries to act together to stop such a trade war for the benefit of business houses and “safeguard the common interest of all mankind.”

American Businesses Brace for More Pain

American companies are poised to bear the brunt of a trade war. They say that the cost of critical supplies needed to make products could jump in the near term. Multinationals, in particular, remain worried about their future ability to do trade in China. Needless to say that China is a massive market for them.

Semiconductor companies were taken aback after the U.S. government decided to impose tariffs on computer chips imported from China. The Semiconductor Industry Association raised concerns by saying “while the U.S. semiconductor industry shares the Trump administration's concerns about China's forced technology transfer and intellectual property practices, the proposed imposition of tariffs on semiconductors from China, most of which are actually researched, designed, and manufactured in the U.S., is counterproductive.”

Other multinationals are caught in the crosshairs of the trade war. For Boeing, China is a big market. After all, the airline manufacturer previously said that it expects China to spend almost $1.1 trillion in the next 20 years by acquiring more than 7,200 new airplanes. Lest we forget that China had threatened to buy Airbus instead of Boeing if the United States gets involved in a trade fight.

Wall Street Takes a Beating on Trade Worries

Geopolitical tensions are, thus, headwinds for companies as they erode profit margins and affect the overall economy. U.S. bourses did close lower after Washington-Beijing exchanged blows due to the ongoing trade dispute.

5 Ultra-Safe Stocks to Buy Now

As the markets are plagued with trade related uncertainty, defensive stocks seem to be the safest investment option. Such stocks are generally non-cyclical, or companies whose business performance and sales are not highly correlated with the activities in the broader market. Their products are in constant demand irrespective of market volatility and such names include companies from the utilities and consumer staples sectors.

Utilities are deemed defensive stocks as electricity, gas and water are essentials. Food, beverage and tobacco companies are true defensive plays as demand for such staple stocks remains unaltered during market gyrations.

Further, only low-beta stocks from such defensive companies have been selected. After all, low-beta stocks are the ones that are less correlated to the index and tend to be less volatile. In this case, a low beta ranges from 0 to 1.

We have selected five such stocks that hold a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Ameren Corporationoperates as a public utility holding company. It has a beta of 0.27. The Zacks Consensus Estimate for its current-year earnings rose 0.3% in the last 60 days. The stock’s expected earnings growth rate for the current year is 7.4% versus the Utility - Electric Power industry’s estimated rally of 6.4%.

CenterPoint Energy, Inc.offers electric transmission and distribution services to retail electric providers, municipalities, electric cooperatives, and other distribution companies. It has a beta of 0.53. The Zacks Consensus Estimate for its current-year earnings rose 2.6% in the last 60 days. The stock’s expected earnings growth rate for the current year is 16.1% versus the Utility - Electric Power industry’s estimated rally of 6.4%.

South Jersey Industries, Inc.provides energy-related products and services. The company engages in the purchase, transmission, and sale of natural gas. It has a beta of 0.59. The Zacks Consensus Estimate for its current-year earnings rose 0.6% in the last 90 days. The stock’s expected earnings growth rate for the current year is 29.3% versus the Utility - Gas Distribution industry’s estimated rally of 6.2%.

The Boston Beer Company, Inc.produces and sells alcohol beverages primarily in the United States. It has a beta of 0.54. The Zacks Consensus Estimate for its current-year earnings surged 9.7% in the last 60 days. The stock’s expected earnings growth rate for the current year is 22.6% versus the Beverages - Alcohol industry’s estimated rally of 14.3%.

Ollie's Bargain Outlet Holdings, Inc. operates as a retailer of brand name merchandise. The company offers food products, housewares, books and stationery, bed and bath products, floor coverings, electronics, and toys. It has a beta of 0.18. The Zacks Consensus Estimate for its current-year earnings increased 3.6% in the last 60 days. The stock’s expected earnings growth rate for the current year is 36.8% versus the Consumer Products - Staples industry’s estimated rally of 12.1%.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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Ameren Corporation (AEE) : Free Stock Analysis Report
 
CenterPoint Energy, Inc. (CNP) : Free Stock Analysis Report
 
South Jersey Industries, Inc. (SJI) : Free Stock Analysis Report
 
Ollie's Bargain Outlet Holdings, Inc. (OLLI) : Free Stock Analysis Report
 
The Boston Beer Company, Inc. (SAM) : Free Stock Analysis Report
 
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